UK betting firms bet on US after sports betting wager ruling
5 June 2018
By Natalie Sherman
Business reporter, New york city
It's high stakes for UK firms as sports betting starts to spread out in America.
From Tuesday, brand-new guidelines on betting entered impact in Delaware, a tiny east coast state about two hours from Washington.
Neighbouring New Jersey might start accepting sports betting bets as early as Friday.
The changes are the first in what could end up being a wave of legalisation after the Supreme Court last month cleared the way for states to allow sports betting wagering.
The industry sees a "when in a generation" opportunity to develop a new market in sports betting-mad America, said Dublin-based financial expert David Jennings, who heads leisure research study at Davy.
For UK firms, which are grappling with consolidation, increased online competition and tougher guidelines from UK regulators, the timing is especially appropriate.
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But the industry states counting on the US stays a risky bet, as UK companies deal with complex state-by-state regulation and competitors from established local interests.
"It's something that we're actually concentrating on, but similarly we don't desire to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which recently acquired the US fantasy sports betting site FanDuel.
'Take some time'
The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming earnings last year, according to a report by Technavio, external released in January.
Firms are hoping to take advantage of more of that activity after last month's choice, which struck down a 1992 federal law that barred states beyond Nevada and a few others from authorising sports betting wagering.
The judgment discovered the law was an over-reach of federal power. But the court it did not in fact legalise sports betting, leaving that question to local legislators.
That is expected to cause substantial variation in how firms get licensed, where sports betting can take place, and which events are open to speculation - with big implications for the size of the marketplace.
Potential revenue varieties from $4.2 bn to nearly $20bn annually depending on factors like the number of states transfer to legalise, Oxford Economics approximated in a 2017 study for the American Gaming Association.
"There was a great deal of 'this is going to be substantial'", said Will Hawkley, London-based head of leisure for specialists KPMG.
Now, he stated: "I think many people ... are taking a look at this as, 'it's a chance however it's not going to be $20bn and it's going to be state by state and it's going to take some time'."
'Remains to be seen"
Chris Grove, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some form by 2023, producing a market with about $6bn in annual income.
But bookmakers deal with a far various landscape in America than they do in the UK, where wagering shops are a frequent sight.
US laws minimal betting mainly to Native American lands and Nevada's Las Vegas strip up until relatively just recently.
In the popular creativity, sports betting has actually long been connected to a 1919 baseball World Series match-fixing scandal.
States have actually also been slow to legalise many types of online gambling, despite a 2011 Justice Department opinion that appeared to eliminate barriers.
While sports betting is normally viewed in its own category, "it clearly remains to be seen whether it gets the sort of momentum people think it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering policy.
David Carruthers is the former president of BetonSports, who was jailed in the US in 2006 for running an overseas online sportsbook and served jail time.
Now a consultant, he says UK firms need to approach the marketplace carefully, choosing partners with care and avoiding errors that could result in regulator backlash.
"This is an opportunity for the American sports betting gambler ... I'm not sure whether it is a chance for service," he states. "It really depends on the outcome of [state] legislation and how business operators pursue the opportunity."
'It will be collaborations'
As legalisation starts, sports betting wagering companies are lobbying to fend off high tax rates, in addition to requests by US sports betting leagues, which desire to collect a portion of income as an "integrity fee".
International business face the added obstacle of an effective existing video gaming market, with gambling establishment operators, state-run lotteries and Native American people that are seeking to defend their turf.
Analysts state UK companies will need to strike partnerships, using their know-how and innovation in order to make inroads.
They indicate SBTech's current announcement that it is supplying innovation for Kentucky Derby operator Churchill Downs as an example of the kind of deals most likely to materialise.
"It will be a win-win for everyone, but it will be partnerships and it will be driven by technology," Mr Hawkley stated.
'It will just depend'
Joe Asher, president at William Hill US, is clear-eyed about the realities.
The company has been buying the US market because 2011, when it bought three US companies to develop an existence in Nevada.
William Hill now uses about 450 people in the US and has revealed partnerships with gambling establishments in Iowa and New Jersey.
It works as danger manager for the Delaware Lottery and has invested millions along with a regional designer in a New Jersey horse racing track.
Mr Asher stated William Hill has ended up being a family name in Nevada but that's not always the goal everywhere.
"We definitely mean to have an extremely substantial brand presence in New Jersey," he stated. "In other states, it will simply depend upon regulation and possibly who our regional partner is."
"The US is going to be the greatest sports betting market on the planet," he included. "Obviously that's not going to take place on day one."
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